MISO stakeholders remain apprehensive about the RTO’s plan to hold four seasonal capacity auctions with separate reserve margins before the 2023-24 planning year, less than a month before it gets FERC scrutiny.
Nearly all their concerns can be traced to a seasonal capacity accreditation based on a generating unit’s past performance during tight conditions.
During a Resource Adequacy Subcommittee call Wednesday, Entergy’s Wyatt Ellertson said the accreditation design seems poised to raise several of MISO’s local resource zones to the cost of new entry (CONE), which currently stands around $257/MW-day. He asked the grid operator to give members more time to prepare for the changes.
“What I haven’t heard you say is this proposal doesn’t reflect reality,” MISO Director of Resource Adequacy Coordination Zakaria Joundi responded. He said staff is not trying to avoid or achieve CONE pricing in its capacity auction.
In September, MISO leaders gave stakeholders an extra 60 days to digest the proposal. Several stakeholders have said they’re incredulous that a seasonal paradigm will improve system reliability. (See MISO Extends Seasonal Auction Discussions.)
Staff has said a FERC filing will be made no later than Dec. 1.
Kevin Vannoy, MISO’s director of market design, said awarding a greater accredited capacity value to generators that consistently show up when they’re needed the most should boost reliability.
“Over time, that will incentivize resources to be available during the time of tightest needs, so that in turn incentivizes reliability,” he said.
Independent Market Monitor (IMM) Michael Chiasson said it’s only appropriate for a local resource zone stocked with slow, inflexible resources to receive lower accreditations and force the zone to procure additional resources.
Stakeholders asked whether MISO has a plan to alter its accreditation if its resource adequacy outlook improves and it is again flush with reserves. Some said staff was pessimistic to assume that the RTO would always have tight operating conditions as a basis for capacity accreditation.
“We may have to add provisions if we never have less than a 25% reserve margin,” Vannoy said. However, he said even three years without a single maximum generation event isn’t a guarantee that MISO won’t experience tight operating conditions during an upcoming year.
“That’s a high-class problem to have,” MISO’s Scott Wright said.
Coalition of Midwest Power Producers representative Travis Stewart said the RTO’s sustained increase in maximum generation events and emergency actions in “mild system conditions” means that utilities might need to update integrated resource plans and prioritize some generation projects.
“There’s indication of a big issue even if the Planning Resource Auction is printing low prices,” Stewart said.
He pointed out that MISO’s Monitor has long maintained that the capacity auction doesn’t reflect the true marginal value of capacity.
Staff has warned that threat of a maximum generation emergency exists on any given day due to increased use of intermittent resources and an aging baseload fleet that’s more prone to outages. In spite of system load around 70 GW and mild weather, MISO entered conservative operations and a maximum generation alert Oct. 4 in its Midwest region because of planned and unplanned generation outages.
Bill Booth, consultant to the Mississippi Public Service Commission, asked whether MISO is furnishing specific accreditation numbers for individual generators.
Joundi said staff has reached out to members about certain generators’ value. He cautioned that MISO doesn’t have the resources to produce outputs for a large load-serving entity’s entire fleet.
The grid operator will also impose a 31-day limit on planned generation outages in any season before capacity resources must procure replacement capacity. The IMM will also consider requests from generators to be excluded from auction participation, even if it will be uneconomic for units to offer into the auctions.
Ellertson asked MISO to provide the numbers of generators not participating in the auctions due to the 31-day outage threshold.
Minimum Capacity Requirement Exits Filing
MISO will file separately with FERC a minimum capacity requirement request in which members must demonstrate that at least 50% of capacity needed to meet their peak load is secured ahead of the voluntary capacity auction.
MISO had originally intended to include the rule in its seasonal capacity filing.
“We’ve been receiving a lot of feedback from stakeholders indicating that we need to separate [a capacity demonstration] from seasonal accreditation,” MISO counsel Michael Kessler told stakeholders during an October Resource Adequacy Subcommittee meeting. “We’ve had a lot of internal discussions regarding our best chances for success at FERC.”
The Organization of MISO States said it supported removing a minimum capacity obligation from MISO’s first filing.
Members Ask for 3 Filings
Some MISO members don’t think the filing split goes far enough. DTE Energy asked staff to further divide the plan into three separate filings for the seasonal auctions, minimum capacity requirement, and the availability-based accreditation. DTE also asked that the RTO hold off on the accreditation component until it more fully addresses stakeholder concerns.
The utility maintains that the auction and accreditation design hasn’t been fleshed out with stakeholders and continues to evolve late in the process.
Members Consumers Energy, Entergy, Madison Gas and Electric, Michigan Public Power Agency, Southern Minnesota Public Power Agency and WPPI Energy joined DTE in the ask.
“Now that it’s been split once, it’s doable to split it again,” DTE’s Eric Bidlingmaier said. “Doing so will allow stakeholders to better support or oppose any component of the filing and allow each aspect of the proposal to be evaluated on its own merits.”
Bidlingmaier said MISO is attempting to “fundamentally re-engineer nearly every aspect of its resource adequacy construct in a way that no other U.S. RTO has ever undertaken.”
Some stakeholders said a three-way split of the filing would provide greater assurance that MISO could implement parts of the plan, instead of having a comprehensive design rejected by FERC.
Customized Energy Solutions’ Ted Kuhn said he didn’t view the members’ ask as “obstructionist,” but rather as a plea for staff to propose a better accreditation design.
Wright said he didn’t see the request as obstructionist either, but he said MISO views the seasonal auction and accreditation as going hand-in-hand. He noted that the RTO has already granted a delay request by stakeholders and will move ahead with the filing at the end of the month.
During OMS’s annual meeting Oct. 28, North Dakota Commissioner Julie Fedorchak said she was at odds with her state’s utilities for her support of “starting to hold resources accountable” for their availability.
“I personally am comfortable with this,” Indiana Utility Regulatory Commissioner Sarah Freeman said, adding it was imperative that MISO values a resource’s contribution accordingly.
